EXAMPLES OF CONVENTIONAL AND UNCONVENTIONAL MALL SOLUTIONS

In the February, 1998 issue of Shopping Center Business, I presented an article that addressed conventional and unconventional solutions to mall problems. This article is, in a way, a sequel.

The objective of this article is to discuss some examples of conventional and unconventional actions taken by shopping center owners and developers to address mall problems. There are numerous examples throughout North America of conventional solutions. However, there are far fewer examples of successful unconventional fixes.

Let's examine several. Conventional solutions usually include adding a department store, remerchandising the existing mall, adding a cinema (and food court), and expanding the GLA. One such example is as follows: Bayshore Mall - Milwaukee, Wisconsin Bayshore Mall in a Milwaukee suburb was built in 1953 as an "L" shaped strip shopping center containing both the Boston Store and Sears department stores. In 1980's, Bayshore was enclosed and the center, renovated. In approximately 1992, the Owners recognized that retailing and demographics were changing. The Sears store was antiquated and some of the retailers were experiencing sales declines. Furthermore, a portion of the trade area to the south had a decline in household income. Management initiated a complete market feasibility study including an analysis of the Mall's customer characteristics, the most frequent shoppers, and the current trade area. Additionally, a trade area resident telephone survey was conducted to determine why some area residents were not shopping at the Mall. As a result of the study, a strategic plan was prepared.

Mall ownership drew up a redevelopment and leasing plan to improve the Mall and strengthen its store mix. Sears built a new 117,000 square foot store; the Boston Store was remodeled and expanded by approximately 30,000 square feet; and Barnes & Noble was added, along with numerous other stronger chain merchants. The result is a reinvigorated Mall fully capable of serving Milwaukee's North Shore communities.

Unconventional solutions are almost always the result of mall problems. Moreover, they usually require drastic changes. Sometimes those changes are primarily physical; while in other situations might include major tenant alignment and additions of big boxes and/or non-retail uses. Several examples of unconventional solutions are presented below:

Charles Towne Square - Charleston, South Carolina
Located at Interstate 26 and Montague Avenue, Charles Towne Square contains approximately 461,000 square feet. The Mall, prior to the current renovation, had department stores operated by Penney's and Ward's, along with Service Merchandise and Wilson's. The Mall opened in 1976. Penney's closed its store about three years ago. Changes in the market area, combined with competition, resulted in sales declines and increased vacancy. Recognizing these changes, the Simon-DeBartolo Group decided to drastically change the orientation of the Mall. Current actions will result in the de-malling of the complex. The entire tenant GLA is being demolished to be replaced with big box retailers and other uses. Only Ward's continues to operate a department store. A Regal Cinema of approximately 75,000 square feet with 18 screens is being added, along with a Piccadilly Cafeteria. Also, a Marriott Courtyard hotel will become a part of the complex. When the entire redevelopment is competed, Charles Towne Square will be a conventional big box strip shopping center and no longer a mall. something this radical is undertaken only when conventional solutions offer no remedy.

Mundo E - Mexico City
During 1993 and 1994, Mexico enjoyed unprecedented economic prosperity. A major mall known as Metropol was planned in the northwest portion of the Mexico City Metropolitan Area. The Mall was to be anchored by Dillard's, J.C. Penney, and Palacio de Hierro. Palacio de Hierro is considered the Saks Fifth Avenue of Mexico. In November 1994, the Mexican Peso experienced a major devaluation, creating perhaps the worst economic crisis that Mexico had ever experienced. Foreign capital fled the country and most planned or under-construction projects were stopped. Metropol at that time was under construction. Dillard's decided not to enter Mexico and Penney's delayed its decision. Palacio de Hierro was offered a site in the nearby Plaza Satélite with Liverpool and Sears and is currently under construction. Thus, Metropol's future was clearly in jeopardy. The Owners of the partially completed mall were faced with a significant decision. What to do with approximately 530,000 square feet of building area and no department stores. First, the Owners, FRISA's Division Comercial, recognized the problem and the need to find an immediate alternative solution. They employed professional international architectural and market consultants to assist in making sound rational decisions. A new concept evolved directed toward entertainment. Mundo E, which means Entertainment, will be based upon a unique Botanical Theme, featuring three distinct districts with individual architectural characteristics. The entertainment mall will contain a 19-screen cinema with 70,000 square feet, at least five major international theme restaurants (Rainforest Cafe, Official All Star Cafe, Santa Fe Beer Factory, and others), a very large records store, a major game arcade, a 50,000 square feet health club, a Carrefour hypermarket of 270,000 square feet, a food court with 50,000 square feet, and numerous other entertainment venues and specialty retail shops. The first phase of Mundo E, with the Carrefour hypermarket, will contain approximately 800,000 square feet. The second phase envisions adding a department store or other entertainment venues. The final planned project will exceed 1,200,000 square feet. The project is currently under construction.

Orland Park Place - Orland Park, Illinois
This three department store two-level enclosed mall with about 800,000 square feet was opened in 1985. This facility represents an example of a mall that should never have been built. The original mall consisted of department stores operated by Ward's, Wieboldt's, and MainStreet. Orland Square Mall, featuring department stores operated by Marshall Field's, Carson Pirie Scott & Company, Sears, and J.C. Penney, is located across the street. This mall, containing over 1,200,000 square feet was then and is today very successful. Wieboldt's failed and Kohl's took over MainStreet. Specialty stores soon started exiting the Mall. Over the next 10 years, the Mall continued to be a problem seeking a solution. Many attempts have been made to resurrect the Mall. Almost all were essentially conventional retailing with some minor variations. Only two department stores remain - Montgomery Ward (in bankruptcy) and Kohl's. Hiffman Shaffer Associates, Inc., a well-known commercial developer and leasing company, has devised a new plan to solve the Mall's problems. The solution calls for the conversion of the Mall's two level GLA into big box operations. Essentially, the Mall as it exists today will be eliminated. In its place, big boxes will be placed in the former tenant GLA on both levels. However, the stores will face an enclosed mall and a new dramatic center atrium. Tenants being considered include: Office Depot, Sport Mart, Wickes Furniture, Cost Plus, Off Fifth, Old Navy, Barnes & Noble, Filene's Basement, Comp USA, Bed Bath & Beyond, Marshalls, and others. Plans call for construction to begin later this year.

Richardson Square - Richardson, Texas
Richardson Square with over 880,000 square feet opened in 1979 in the north Dallas suburban area. The Mall's three department stores included: Dillard's, Sears, and Ward’s. However, because of changes in the marketplace, the Owners - the Simon-DeBartolo Group - have decided to retenant the Mall with big box retailers. The objective of this change is to adjust the Mall to consumer and retailer demand. This change is occurring while retaining the enclosed nature of the mall. Thus, big boxes are being placed in the Mall along with a major medical clinic and a large health club. Big boxes include: Stein Mart, Ross Dress for Less, Barnes & Noble, Old Navy, Oshman's Super Sports, and others. The common area and food court is being renovated. Dillard's, Sears, and Ward’s are currently reviewing their merchandising strategy. The conversion of any mall to big box orientation is a challenging process both physically and financially. Furthermore, many big boxes tend to hurt small stores in their respective retail category because of their buying and pricing power. Often, when the conversion is complete, there are far fewer small tenants. Nonetheless, the change is necessary where the only tenants for mall space are big box users. Common solutions for unconventional renovation include: cinemas, food courts, restaurant clusters, big boxes, along with major service users such as health clubs, offices, hotels, colleges and university branches, governmental offices, and other non-retail uses.